EDITOR’S NOTE: Corrections have been made to accurately reflect the relationship among Abbott Laboratories, Mylan, Perrigo and Teva Pharmaceutical. We apologize for the errors.
U.S. markets bounced back today after a tough start to the week, shrugging off the Greek debt impasse to focus more on the two-day Federal Reserve meeting and any announcements that will come from the Federal Open Market Committee (FOMC) on Wednesday afternoon.
Most on Wall Street are betting against a rate hike until the September meeting.
In other economic news, the Commerce Department reported an unusual dichotomy between May housing starts, down 11.1%, and building permits, up 11.8%. The seasonally adjusted pace of 1 million units was well below the 1.1 million expected by economists.
Of the two, housing starts are the more important factor, as permits can be pulled for starts far off in the future, and not all permits conclude in starts. Analysts are hoping the increase in permits means that the decline in starts will only be temporary.
But on the heels of Monday’s builder’s confidence index rising to a nine-month high of 59, the starts number is curious indeed.
The Dow Jones Industrial Average and the S&P 500 were up 0.6%, while the Nasdaq Composite was 0.5 % to the good. It was a green day for all the sectors, with consumer goods and technology leading all stocks.
Total and even partial business acquisitions continue to generate hot stocks on Wall Street, and today was no exception. Just ask the shareholders of Monster Beverage Corp (MNST), Coty Inc. (COTY) and Perrigo Company PLC (PRGO), all of which celebrated healthy gains to become three of today’s best stocks.
Monster Beverage Corp (MNST)
MNST stock was energized by analysts at Citigroup, who added it to their “focus list” this morning. Citigroup maintained its “buy” rating with a $155 price target on MNST stock, and says that it sees considerable upside from here on, and outsized sales and earnings growth over the next five years.
The catalyst for Citi’s fervor was the closing of the partnership announced yesterday between The Coca-Cola Co (KO) and MNST, in which Monster transfers all of its non-energy drinks to Coca-Cola, who will then own 16.7% of MNST.
In return, MNST gets $2.1 billion in cash. Now that’s a sweet deal for both!
MNST stock finished 4.1% higher, and is up 22% so far this year.
Coty Inc. (COTY)
The sweet smell of success was in the air this morning, after Coty, a New York-based fragrance and cosmetics manufacturer announced it will be purchasing the beauty product lines of Proctor & Gamble Co (PG) for $12 billion.
In addition, Coty has also won an auction to acquire PG’s hair-care unit. COTY stock gapped up 19.3% and is now 50% higher for the year.
The deal will make Coty No. 1 in the world for perfume and hair care. It will include brands like Gucci and Hugo Boss perfumes, Wella and Clairol hair coloring products, and Max Factor and Cover Girl makeup.
Perrigo Company PLC (PRGO)
PRGO stock was up 4.3% today after Abbott Laboratories (ABT), Mylan NV’s (MYL) largest shareholder, said it would vote its 14.5% of MYL outstanding shares to approve the deal to acquire Perrigo, saying it added value for shareholders.
The $34.1 billion offer from Mylan for Perrigo comes at the same time that Teva Pharmaceutical Industries Ltd (ADR) (TEVA) is attempting to buy Mylan.
No shareholder meeting has been scheduled yet to discuss the purchase.
PRGO stock is up 14% so far this year.
As of this writing, Ethan Roberts does not hold a position in any of the aforementioned securities.
